San Bernardino reached an interim agreement with its largest creditor, CalPERS, that it says will help form its plan to exit bankruptcy protection, according to a court filing.

The city’s bankruptcy attorneys report in the status update for Thursday’s hearing in U.S. Bankruptcy Court in Riverside that the terms of the agreement were given to the judge handling mediation between creditors in the bankruptcy and are subject to the confidentiality requirements of that mediation.

The other parties to the mediation — union attorneys, for example — were given the terms of the agreement subject to the gag order, the city says.

“The details of the agreement, including the timing and amount of payments to be made, will remain confidential as the mediation regarding a potential plan of adjustment is ongoing,” the filing states.

The agreement means that CalPERS’ appeal in the 9th Circuit Court that the city isn’t eligible for bankruptcy will continue to be put off and the city “will make certain payments to CalPERS on deferred amounts owing,” the filing says.

San Bernardino withheld the employer portion of CalPERS payments from the time of its bankruptcy filing until July 2013, a step not taken by other bankrupt cities. CalPERS calculates the city’s debt as $16.5 million, plus interest. In the outline of its budget during bankruptcy known as the pendency plan, San Bernardino said in 2012 that it would pay the full amount it owes CalPERS.

Working toward a settlement between the California Public Employees’ Retirement System and the city has been the centerpiece of mediation talks with Judge Gregg Zive, according to brief statements made in previous filings and court appearances.

The theory was that once the largest piece of the city’s financial obligations was decided, the remaining parties would know how much remained to work with.

But at the last hearing, in May, U.S. Bankruptcy Judge Meredith Jury expressed impatience with the pace of the mediation talks and sympathy with attorneys for the police and fire unions who said that focus was preventing progress on their disagreements with the city.

The city has also met with representatives of its retired employees, police and fire unions and bondholders, it reports in the filing.

“Having recently concluded its plan negotiation with the California Public Employees’ Retirement System (“CalPERS”), the City, its officers and legal counsel are now fully engaged in negotiating replacement MOUs (contracts) for the Police and Firefighters Unions,” the filing states. “…The City’s proposals are not easy for the Objecting Unions to accept, to say the least, but they are absolutely necessary for the rehabilitation of the City.”

The San Bernardino City Professional Firefighters, in particular, maintain that progress has been minimal despite several meetings.

“The SBCPF has engaged, in good faith, in mediation to see if it would be possible to achieve a consensual agreement with the City,” they report in their own filing. “Offers were exchanged, but, in the SBCPF’s opinion, without any meaningful progress. The SBCPF believes there is a stalemate and there has been little to no direct progress between the parties at this time.”

The firefighters’ attorneys also say in their filing that they’ve discovered that the city had invested $53 million in cash and investments in Federal Agency-Issue Coupons, Certificates of Deposit, Local Agency Investment Funds and miscellaneous securities between June 2012 and December 2013, with further investments of $23 million from January 2014 through April 2014.

“These investments were made during a fiscal year that the city claims it is operating at a deficit with a projected $22 million deficit for the next fiscal year,” they write.

Ryan Hagen covers the city of Riverside for the Southern California Newspaper Group. Since he began covering Inland Empire governments in 2010, he's written about a city entering bankruptcy and exiting bankruptcy; politicians being elected, recalled and arrested; crime; a terrorist attack; fires; ICE; fights to end homelessness; fights over the location of speed bumps; and people's best and worst moments. His greatest accomplishment is breaking a coffee addiction. His greatest regret is any moment without coffee.

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